Running a small business in the Philippines can no doubt be a rewarding experience, but it’s also important to be aware of the risks that come with being an entrepreneur. Business risks can come from a lot of places, and you must be able to identify these sources so you can prevent them from negatively affecting your enterprise. By keeping risks at bay, you have a better chance of ensuring the sustainability of your business and rising above the competition. To that end, here’s a list of the common risks that you need to be aware of as a small business owner.
Financial Risk
One of the most significant threats to small businesses, financial risk can be due to a lot of factors, including inadequate cash flow, high levels of debt, or poor financial planning. Without sufficient funds, it would be difficult to cover operational costs or manage unexpected expenses. This can also impact your business’s ability to sustain its growth.
There are plenty of ways to mitigate financial risk. One of these is maintaining a healthy cash reserve to cushion against unexpected financial needs. Maya Business has several solutions that you can use to sustain your business and build your cash reserve. Maya Flexi Loan, for one, is a business loan that provides entrepreneurs like you instant access to up to PHP 2 million in extra capital to support your operations or expansion plans. This amount can be divided into multiple business banking loans to fit your exact needs. You can also create a Maya Business Deposit account and maximize its 2.5% interest rate to quickly achieve your goal amount for your financial cushion.
In addition to accessing additional funding, it’s a must as well to monitor your cash flow regularly and ensure that your income consistently exceeds your expenses. Lastly, create and adhere to a realistic budget to control spending and ensure your business’s financial stability.
Market Risk
Changes in the market, such as shifts in customer preferences, economic downturns, or increased competition can lead to market risks. These changes can impact the sales and profitability of your business. Navigating changes in the market means conducting regular market research to stay informed about industry trends and customer needs and being prepared to pivot your business strategy when necessary.
Another tried-and-tested strategy for overcoming challenges brought about by market changes is diversifying your product or service offerings. Spreading revenue sources across different areas reduces dependence on a single market or product, and it also minimizes the impact of market fluctuations or changes in consumer demand. This approach ensures more stable income streams for your business.
Likewise, maintaining a strong relationship with your customers can prove to be a hedge against market risk. A deeper connection allows you to better understand and anticipate the preferences of your target market, which then empowers you to adapt your business strategies more effectively. This approach also helps in boosting customer lifetime value, which is the total revenue that your business can expect to earn from each single customer throughout the entirety of your relationship with them.
Internal Operational Risk
It’s also possible for risks to come from within your organization. Operational risk is one of these, and it involves internal failures such as process breakdowns and human errors. These issues can disrupt your business operations and lead to financial losses.
Avoiding operational risks entails developing and enforcing standard operating procedures (SOPs) to ensure consistency and efficiency in your operations. This can mean periodically inspecting your premises and your business offerings to identify operational risks then addressing them to mitigate their impact. Risks can emerge from a variety of things, including data entry errors, poor decision-making, and non-compliance with established protocols.
You can also develop a response plan to prepare your business for events such as computer system failures, which can disrupt operations. Subscribing to cloud-based backup services is one way of speeding up the recovery process during such situations.
Your staff also plays a role in keeping operational risk at bay. It’s a smart move to regularly train your team members to keep them competent and aware of current best practices. If the company is commonly targeted by phishing attacks, for example, then it’s good practice to conduct phishing awareness training for employees. This is an effective way of addressing security issues that can interrupt business processes.
Legal and Regulatory Risk
Businesses of all sizes in the Philippines are subject to regulations. Non-compliance to rules that govern your enterprise can potentially lead to legal and regulatory risks. To avoid fines, lawsuits, and even the possibility of business closure by regulating government agencies, make it a point to manage legal and regulatory risks. You can do this by staying informed about relevant laws and regulations in your industry.
If needed, seek advice from legal professionals to ensure compliance and maintain thorough documentation of your business operations and transactions. Investing in appropriate business insurance can also protect you against legal liabilities and provide you peace of mind.
Cybersecurity Risk
Many small businesses rely on digital tools and technology for their everyday activities. It’s a must for these enterprises to be aware of cybersecurity risks such as the threat of data breaches, hacking, and other cyber-attacks. Unfortunately, many cybercriminals target small businesses like yours as companies of this size typically lack the strong security measures employed by bigger businesses.
To protect your business from cybersecurity risks, implement standard security measures such as firewalls, network segmentation, and encryption. Educate your employees as well about cybersecurity best practices and the dangers of phishing scams. To protect your systems from vulnerabilities that can be exploited by cybercriminals, ensure that all software and systems are regularly updated and back up your data regularly to secure locations.
Natural Disasters and Emergencies
Common natural disasters in the Philippines like typhoons, floods, and earthquakes can significantly disrupt your business operations. Without adequate preparation, these events can lead to substantial financial losses. As a preventative measure, ready your business for the impacts of natural disasters and emergencies by developing an emergency response plan to handle various scenarios. For example, prepare a checklist of items to inspect in preparation for a typhoon or after an earthquake, and periodically conduct emergency fire drills so that your employees know what to do in such an event. It’s also prudent to obtain the right insurance products to cover losses from events that can disrupt operations.
Mitigate Financial Risks with Help from a Reliable Business Banking Provider
Protect your business from common risks by partnering with a financial services provider that understands your needs, like Maya Business. Begin by signing up for Maya Business so you can open a Maya Business Account and use it as your settlement account. With an industry-leading 2.5% per annum interest rate, you’ll earn PHP 25,000 in interest per year on a PHP 1 million deposit. Furthermore, signing up for Maya Business enables you to send money to your partners and suppliers for free via InstaPay and PESONet, letting you save more.
Joining Maya Business also qualifies you for a no-collateral Maya Flexi Loan offer of up to PHP 2 million in just 3 months. Having access to this customizable loan will allow you to easily cover unexpected expenses and sustain the cost of your everyday operations. Just use Maya as your primary processor for all wallet and card payments. The more you use our solutions, the better the loan offer will be.
Sign up for Maya Business today to enjoy the benefits and financial support offered by Maya Business solutions.
